Apartment Investment and Management Company (AIV) Q3 2011 Earnings Report, Transcript and Summary

Lisa R. Cohn - Executive Vice President, General Counsel and Secretary John Bezzant - Executive Vice President of Transactions Keith Kimmel - Executive Vice President of Property Operations Terry Considine - Founder, Executive Chairman, Chief Executive Officer and Chief Eecutive Officer of AIMCO-GP Inc Ernest M. Freedman - Chief Financial Officer and Executive Vice President

Derek Bower - UBS Investment Bank, Research Division Andrew McCulloch - Green Street Advisors, Inc., Research Division Eric Wolfe - Citigroup Inc, Research Division Ross T. Nussbaum - UBS Investment Bank, Research Division Jana Galan - BofA Merrill Lynch, Research Division Richard C. Anderson - BMO Capital Markets U.S. David Bragg - Zelman & Associates, Research Division Michael J. Salinsky - RBC Capital Markets, LLC, Research Division Swaroop Yalla - Morgan Stanley, Research Division Haendel Emmanuel St. Juste - Keefe, Bruyette, & Woods, Inc., Research Division Robert Stevenson - Macquarie Research

Good day, and welcome to the Third Quarter 2011 Apartment Investment and Company Earnings Conference Call and Webcast. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ms. Lisa Cohn, Executive Vice President and General Counsel. Ms. Cohn, please go ahead.

Thank you. Good day. During this conference call, the forward-looking statements we make are based on management's judgments, including projections related to 2011 results. These statements are subject to certain risks and uncertainties, a description of which is found in our SEC filings. Actual results may differ materially from what may be discussed today. Also, we will discuss certain non-GAAP financial measures, such as funds from operations. These are defined and are reconciled to the most comparable GAAP measures in the supplemental information that is part of the full earnings release published on Aimco's website. Participants on today's call will be: Terry Considine, our Chairman and CEO, who will provide opening remarks; and Ernie Freedman, our CFO, who will review third quarter results, our balance sheet and guidance. Also in the room today: John Bezzant, Executive Vice President, Transactions; Miles Cortez, Executive Vice President and Chief Administrative Officer; Keith Kimmel, Executive Vice President, Property Operations; and Dan Matula, Executive Vice President, Redevelopment and Construction Services. We are available to answer questions at the conclusion of our prepared remarks. I will now turn the call to Terry Considine. Terry?

Thank you, Lisa, and thanks to all of you on the call for your interest in Aimco. Our report today is upbeat, business is good. It remains a good time to be in the apartment business. And we are on track to meet our 2011 plans. Rental rate growth increased during the quarter, increasing revenue and raising our prospects for 2012 as our $14-plus million loss to lease earns in. As we look to the fourth quarter, we expect continued rental rate growth, but with the change in mix with renewal rates increasing by more than new lease rents. Our portfolio of transformation continues with the sale of lower rent, lower growth properties and reinvestment of sales proceeds in higher rent, higher growth acquisitions and in funding our $400 million redevelopment pipeline. There, we expect returns comfortably in excess of those available on new acquisitions. Our balance sheet is in good shape. Of interest, the market for property debt remains open, with numerous lenders competing for our business and offering historically attractive interest rates. We expect Aimco debt leverage, as measured by debt to EBITDA, to decline to, say, 8:1 over the next 12 to 18 months through a combination of property sales, property debt amortization and property net operating income growth. Our plan is to simplify Aimco by increasing our ownership and partnerships that owned conventional properties, by liquidating a sizable number of partnerships where Aimco has a low ownership in affordable properties, by liquidating our legacy asset management business and by simplifying our offsite business process. All these are progressing and contribute to lower offsite costs, including G&A. As we work to finish 2011, we enjoy higher rents, wider margins and improved portfolio, a stronger balance sheet, lower offsite costs and embedded growth prospects for next year. These happy prospects reflect contributions from the entire Aimco team, and I offer them my thanks. It's my real pleasure to work with them. And now, I'd like to turn the call to our Chief Financial Officer, Ernie Freedman. Ernie?

Thanks, Terry. On today's call, I will cover the following subjects: First, our third quarter results; second, our recent balance sheet activities; and third, I will provide fourth quarter guidance. As to third quarter results at $0.41 per share, third quarter performing FFO was $0.01 per share above the midpoint of our guidance. As to operating results, you will see in table on Page -- in the table on Page 2 of our earnings release, total same-store NOI, which includes Conventional and Affordable properties, was up 3.8% year-over-year, with Conventional Same Store, up 3%; and Affordable Same Store, up 8.6%. Total same-store revenue was up 3.5% for the quarter, with Conventional Same Store, up 3.5%; and Affordable Same Store, up 3.6%. Conventional Same Store revenue growth was driven by an increase in average rents of 3.1%, which was offset somewhat by an 80 basis point decline in occupancy. Conventional Same Store leases during the quarter were up 5.8% from the corresponding expiring lease. On an overall basis, these increases were up 6.1% in July and August and 5.2% in September. We continue to have about 2 renewal leases for each new lease, and the rates of increase for each are as follows. Rates on renewal leases strengthened during the quarter and averaged 5.6% above expiring lease rates compared to a second quarter average of 3.6%. Results by month were: July, up 4.9%; August, up 5.7%; and September, up 6.2%. New lease rates during the quarter averaged 6.1% higher than expiring lease rates compared to 5.1% in the second quarter. Results by month were: July, up 7.2%; August, up 6.7%; and September, up 4%. Our numbers for July and August have changed from what we reported in the press release in September due to our changed same-store population due to property sales that were completed, as well as the addition of some property results from properties that changed to our new property management system during these months. October rates are currently coming in at approximately 5% above expiring lease, with renewal rates at 6% and new lease rates at closer to 3%. Starting in mid-August, we saw a drop in demand that has since persisted. October 2011 visits are down 20% over the same period last year. We continue to be successful in increasing rental rates on expiring leases, but we expect the rate of increase for renewals around 5% and new leases to remain in the 3% to 4% range for the remainder of 2011. On the expense side, total same-store expenses were up 3.1% over last year, primarily due to the timing of real estate tax appeals. Year-to-date, total same-store expenses are 2% lower than the same period last year. Turning to our balance sheet, our only recourse debt obligation is our revolving line of credit, which is used for short-term working capital needs and to collateralize letters of credit. As of September 30, the outstanding balance on the line was $26 million, and collateralized letters of credit also totaled $26 million, leaving us with available capacity on the line of $248 million. Year-to-date, we have further strengthened our balance sheet by reducing our net leverage by $113 million, which includes net refinancing activity, regularly scheduled property debt amortization, loan paydowns and $51 million of notes Aimco purchased from the Freddie Mac securitization trust that holds only Aimco property loans. We continue to make progress on extending our property debt maturities and locking in today's low interest rates. During the third quarter, we refinanced that current balances $105 million of property debt coming due in 2011 through 2014. The weighted average interest rate on the new loans was 4.14%, 53 basis points below that of the loans that were refinanced. All of these loans have a term of 7 years. Non-GSE lenders accounted for about 75% of third quarter refinancing activity. We have just $6 million of maturities coming up in the fourth quarter and no maturities in the first quarter of 2012. As of September 30, $256 million was scheduled to mature through the end of 2012 or about 5% of our outstanding property debt balance. We have rate locked $56 million of third quarter 2012 maturities at an interest rate of 4.52%, which is 230 basis points below that of the existing loans. We are in various stages of the application and negotiation processes for the remainder of our 2012 maturities, as well as for additional maturities beyond 2012. During the third quarter, we completed the initial offering of a new issuance of perpetual preferred equity, our Class Z stock with a coupon rate of 7% and a par value of $25 per share. At closing, we issued 800,000 shares at an effective yield of 7.2%, gross proceeds to Aimco of about $19 million. Net proceeds from the issuance were used to redeem 862,500 shares or 25% of the amount outstanding of our Class Z preferred stock, which has a coupon rate of 8% and generally trades par. During the third quarter, we also issued 23,800 shares under our Class Z at the market program at an effective yield of 7.2%, for gross proceeds of approximately $575,000. We intend to accumulate the proceeds from further Class Z ATM issuances and use them to redeem higher cost preferred equity outstanding and reduce our overall cost of leverage. Lastly, on the balance sheet, during third quarter, we issued about 113,000 shares under our common stock ATM program at a weighted average price of $26.33 per share, generating gross proceeds of about $3 million. Year-to-date, we have issued a total of 2.9 million shares at a weighted average price of $25.27 per share, generating gross proceeds of $74 million, which were used to match fund investment activity, including partnership transactions, acquisitions and redevelopment and other capital expenditures. Looking ahead, we are narrowing full year pro forma FFO guidance from a range of $1.45 to $1.51 per share to a range of $1.46 to $1.50 per share. The midpoint of $1.48 per share is unchanged from our last quarterly update and includes a deduction of $0.15 per share for prepayment penalties included in the second quarter related to the Freddie Mac refinancing and securitization transaction. Excluding onetime items, full year 2011 pro forma FFO is projected to be $1.63 per share, at the midpoint of our guidance or about 10% higher than full year 2010 pro forma FFO. Our projections for full year 2011 property operating results are in line with the ranges we provided last quarter and are as follows: total same-store NOI growth of 5.5%; Conventional Same Store NOI growth of approximately 5%, which is unchanged from the midpoint of our prior guidance and is based on revenue growth of approximately 2.7%; and a decrease in expenses of approximately 1%, which is at the low end of our prior guidance range. We project Affordable Same Store NOI growth of approximately 11% over last year. And across our entire portfolio, we expect full year NOI growth to be approximately 4.5%. Finally, for the fourth quarter, pro forma FFO is projected to be $0.39 to $0.43 per share, with a year-over-year total same-store NOI growth of 4.5% to 5.5%. With that, we will now open up the call for questions. Please limit your questions to 2 per time in the queue. Operator, I'll turn it over to you for the first question, please.

[Operator Instructions] Our first question comes from Jana Galan at Bank of America Merrill Lynch.

Can you please rank which markets you're most excited about going into the back end of the year and which ones you think may lag the portfolio average?

I'll ask Keith Kimmel to address that for us please.

Jana, it's Keith. The markets that we're feeling strong as we continue into the fourth quarter, specifically Northern California and Denver really are leading. We're also seeing strength in Atlanta, Phoenix and Boston. And the ones that we still have some work and are still a little challenged, central Florida and Houston.

And then looking at your expenses, can you give some detail -- it seemed that D.C. and Florida were up or was that due to the real estate tax appeals?

It's exactly what it was Jana. It was the timing of appeals. We had very good success in 2010 with appeals in the third quarter and also in the fourth quarter, and we didn't have as much success this time around. It was driven by the timing of real estate taxes.

The next question comes from Rob Stevenson at Macquarie.

Can you talk a little bit about the Affordable portfolio? I mean the NOI growth there continues to be very strong. Is it a case of addition by subtraction or is the momentum not strong in that business right now?

Rob, this is Keith. Essentially what it is, is we have the opportunity to go -- appeal for mark-to-market rents in certain markets. That happens sometimes over a 5-year period of time and we've had some opportunities where we took advantage of that and were successful.

Okay. And then can you guys also talk about how you're finding the receptiveness of individuals to sell their partnership interest these days? I mean, the overall equity markets aren't doing well. Are people holding onto these partnership units because they actually are providing positive income, or are you finding good receptiveness there to sell?

Rob, it's Terry Considine speaking. I would say that we're having average interest that we don't have a high volume of transactions right now, and I wouldn't necessarily reason from it one way or another.

The next question comes from Derek Bower at UBS.

I'm here with Ross as well. Can you tell us where your conventional occupancy stands today and maybe discuss your philosophy on pushing rents into next year, balanced against maintaining some level of occupancy going forward?

Derek, this is Keith Kimmel. Today's occupancy, we're at the low 92s -- excuse me, 95.2 and we continued to see an opportunity to push rents. And what we really focus on is our blended average, which is new and renewal rates, which in Q3 was 5.8%. And so we continue to see that opportunity. There will be a change as you've probably seen in the release in new lease and renewal blend, particularly the strength in renewals is been substantiated, and we look forward to the fourth quarter.

It's Ross Nussbaum. Did I hear correctly that you said that demand or traffic is down 20% in the month of October?

Ross, this is Keith Kimmel again. Yes, it is. And particularly, October is where we've seen this. One of the things that needs to be expected is that seasonality is going to occur. But the other is, is that we have seen some pause and the good news with that is, particularly for us, is 2/3 of our business is generated through our renewal business. And our lease expirations going to the fourth quarter are also the lowest points of expiring leases, and so it actually plays into how we've already strategically planned our business. But we have seen some change. We've made some adjustments and it's picked up a little bit most recently but there has been a slowdown.

Why do you think that is other than -- I mean, we heard Equity Residential yesterday and they claim they're hearing the exact opposite with accelerating rent trends. Do you think it's something to do with the demographic profile of your properties?

Ross, this is Ernie. We really -- I really can't speak for what others are seeing. We can only speak to what we're seeing, and Keith laid it out pretty well. We're seeing across the board that there has been a little pause and a bit of a slowdown. But again, looking at how we track our business, what we go after, for us the most important part of our business is that renewal business in terms of the number of leases that we have coming through as renewals. So we want to report the facts on what we're seeing, but also keep in mind how that impacts us. It will have a different impact on us than others in terms of what we're trying to get accomplished with maintaining our high-renewal rates.

The next question comes from Dave Bragg at Zelman. David Bragg - Zelman & Associates, Research Division: Actually, first, I would like to just clarify on that last question. The exact metric that you mentioned fell 20%. That's visits. So your properties fell 20% year-over-year in October?

Dave, Keith Kimmel again. Yes, that's specifically visits and for the month of October. David Bragg - Zelman & Associates, Research Division: Okay. So on a year-over-year basis, I'd imagine that seasonality won't be much of an impact there. So can you talk more about what markets you saw this occur in?

Dave, Keith again. We saw it actually in all the markets across the country. I mean, some had more of a dip than others, but in general, we saw a dip across the country. David Bragg - Zelman & Associates, Research Division: Okay. And just another question here in terms of pricing. Where are you sending out renewals today for December and January, and given the lower level of traffic, what's your comfort level in terms of continuing to accelerate on those renewal increases if you have less people coming in the front door and with your lower-level turnover is certainly understood?

Dave, Keith Kimmel again. Speaking to what we're asking, the renewals are going out between 5% and 7% going forward at the moment. And we're quite comfortable that we will still maintain close to north of 5% on the renewal front. And specifically, as we talk about the front door traffic, this is why we have a little less concern about it is, is that we are really focused on retention. Our retention typically is north of 60% of expiring leases. We anticipate that, that will be similar as we move to the fourth quarter and in fact, look to improve upon that.

The next question comes from Eric Wolfe at Citi.

I guess, not to beat a dead horse here, but just to follow up on some of those questions. I mean how can you be comfortable that you're going to get the 5% to 7%? Shouldn't you set your rates a little bit less aggressively if you're seeing a pause in new demand coming in, right? Because if those people leave in the fourth quarter, there's not many new people coming in, then you're sort of stuck with the occupancy loss.

Eric, Keith Kimmel. I would agree with you if we weren't actually achieving it and we weren't getting the 60% retention, but we are. And so asking rents, as we send them out, does give us the ability to adjust if necessary, and we will watch it closely as we already do. But we have achieved high retention, and we believe we will continue to do so.

Okay. And then I guess along the same lines, could you just share with us your turnover statistics for the third quarter relative to the last year? And then just, if there is sort of any change in going into October?

In the third quarter, we had 40% of our expiring leases that turned over, which is in line with our 60% retention. On a year-to-date basis, it was 38%, so -- of expiring leases. So generally right in line with what we would expect and historically how we've performed.

The next question comes from Swaroop Yalla at Morgan Stanley.

I'd like to know a little bit more by market where you saw the sort of new leases drop. Because I imagine -- you mentioned like Northern California and some of the other regions are strong, so I imagine that those are still accelerating in terms of new leases. I'm just trying to see which markets were the ones which were really driving the downward pressure?

Swaroop, it's Keith. I want to clarify your question. When you say. . .

I'm talking about new leases, which went from 7% in July to, I think you mentioned 4%. This is for the portfolio on the whole, right?

Correct.

So I was just wondering if you can just give us a little more color based on market which ones were the sort of the markets which were really bringing this average down.

So some of the -- to your point, we certainly see strength continuing in places like Denver, Northern California. But some of the markets that we have seen more of a drop -- now just to be clear here, we're still increasing rents over lease to lease. And so I want to be clear about that. But Chicago, Boston, in Florida, specifically central Florida, we've seen some more of a slowdown.

Got it. And I might have missed this, but did you mention something about the LRO system which you were tweaking recently or which was part of this? Or I might have missed that.

Swaroop, I was trying to reconcile as we had put out a press release in September around what our results were in July and August, and we actually had better renewal results in July and August than we reported then from what I reported today. Part of the reason was that with our property management systems that we've talked about earlier this year that we're switching property management systems. When we go through that process, there's actually a dark period of about 2 to 3 weeks where we don't have results. When we went back and added those results in -- towards July and August for the properties that were going through that system, were going through that process. It turned out that our results were even stronger than we had reported back earlier in the quarter.

The next question comes from Michael Salinsky at RBC Capital Markets.

Terry, I want to go back to comments you made in the beginning there. You talked about looking at acquisitions. Is that just partnership buy-ins or are you guys looking a little bit more at the acquisition market? And if that's the case, then what has changed in the last 12 months in terms of purchases, I mean purchase pricing that gives you more confidence at this point to go out and buy?

Michael, it's Terry. And we are looking at it. And John Bezzant is here, who is leading that effort, and he could chime in at the end, but I would say broadly, we feel good about our ability to make accretive acquisitions. We're funding acquisitions with the proceeds on the sale of our weaker assets. We apply a consistent discipline comparing what we're giving up to what we're getting. And we're seeing not -- certainly not by buying the market but by buying anomalies that we're seeing accretive spreads that were -- we find attractive. John, would you want to add or subtract from that?

No, you got it.

Okay. And my follow-up question, Ernie, can you talk a little bit about financing right now? What you're hearing from the GSEs, spreads, LTVs, things of that nature?

Yes, and I think what's changed most, Mike, about what's happening with financing is really what's been going on with the treasury changes as much as it has. We did see spreads widen a little bit from the GSEs but importantly, the property debt markets for property financing like we do have remained wide open over the last 90 days, whereas I know there's been a little bit of disruption in the unsecured markets. We're still able to get deals done at very advantageous pricing for us. And again, a lot of that pricing is driven by where treasuries are today and they're not as nice today as they were maybe a few weeks ago, but it's still a wonderful spot. But the agencies remain wide open for business. More importantly, the banks and the insurance companies and all the other folks who we deal with, and today on our books, we have relationships with 53 different lenders that currently have loans out to us. Most of those remain wide open, and things are looking good there.

The banks and the life insurance companies are still competitive with the GSEs?

Yes. In fact, often they're a little bit more competitive. And hence, in the third quarter, while we closed more than 75% of our loan refinancings with non-GSC lenders, they gave us better terms and we thought this was a better place for us to go.

The next question comes from, Andrew, McCulloch at Green Street Advisors.

You guys own assets really across the quality spectrum. Can you speak any differences in demand trends that you're seeing between your A, B and C properties?

Andrew, this is Keith. What I would say is, is that we actually have seen similar demand trends. The A properties certainly have had less of an impact on the demand than we've seen with the C's as an example. But like I said earlier in our answer on this question is that we have seen it generally across the country.

Okay. And then given that demand and pricing for assets is still pretty strong and your stock's trading at a pretty big discount NAV, are you guys at all thinking about disposition-funded stock buybacks?

Andrew, this is Terry. No. What we are doing is taking advantage of the demand for asset pricing and using it to buy some new assets at -- or higher growth, higher price point assets, as Michael asked about just before.

If you're selling the assets at market, why spend that same dollar in buying assets if you could spend $0.75 and buy stock back -- 75 [ph] cents on a dollar to buy your stock back?

I completely agree with the math and as you know, we have done so in the past. Today, we're trying to balance it with other corporate purposes, in particular, trying to bring down our debt leverage to something more like 8:1.

Next question comes from Rich Anderson at BMO Capital Markets.

Have you looked into the psychology of tenants proposed and trying to get a sense of conclusion as to why you've seen the slowdown in traffic lately? And maybe one way to do that is to -- for those people that do leave, going out the backdoor, what are some of their concerns? And maybe you can extrapolate some of those issues that they have as to why demand is coming down in the front door?

Rich, it's Keith Kimmel. So I guess the first point is that demand that has changed is specifically in October. So it's most recently.

But didn't you say it started in August?

What we've -- we've seen it to start trending. But the 20% quote was -- is from most recently. And the back door hasn't had the same type of impact. Our retention has stayed pretty static at a nice high number as we've had in years past. And so I think they're kind of -- they're 2 different points. The front door is where we've really seen the difference.

Yes, but for the 40% of people that leave, I mean they share one thing in common with those coming in. They're all people. And so maybe there's a consistency as to why they're leaving relative to why people aren't coming in. I guess I'm just looking for, is this a systemic problem or is it temporary or is it just you guys? Or do you have any sense about the depths of this decline in demand as it relates to the industry overall?

Rich, this is Terry. And my view is probably not quite as close to the ground as Keith as far as the day to day. But looking at third-party reviews, I think it's across the board and not specific to us alone. I think it's probably connected to a hunkering-down phenomenon as people wait out the -- sort of the increased concern about the economy. But that’s speculation, and I wouldn't feel qualified to offer an opinion about psychology.

Does it mirror any kind of trend that you've seen in your long history being involved in this space, Terry?

Yes.

Yes. I think when there's uncertainty in the air, people tend to stay home, stay where they are. So it will help us on the renewal business. It will hurt us a little bit on the new business.

The next question comes from Dave Bragg at Zelman. David Bragg - Zelman & Associates, Research Division: Just a follow-up. A lot of your peers track traffic another way to website visits. Is that something that you track, and could you provide that maybe for October?

Dave, we do track website visits -- this is Keith. We track website visits as well. The website visits have also decreased some, but not necessarily in correlation with site visits.

Yes, I would just add maybe for context on that, one of the other things that's going on, I think, is that as websites get better, traffic -- the quality of traffic gets better. And so as, for example, you have real-time pricing on a website, you're less likely to have someone come to the property who's not qualified to be there. So I don't want the decline in visits to be taken out of context. Business remains pretty solid. We expect to have pretty good rent growth during the fourth quarter and to maintain or increase our occupancy. So some of that could be just the changing character of the visits, which is -- of the property visits, which is based on better website utilization. David Bragg - Zelman & Associates, Research Division: Just one other topic, sorry if I missed this earlier. Can you talk about the decline in revenue in the other Conventional portfolio?

Dave, we didn't talk about that specifically, but the decline in other revenue, those are assets we've taken out of Same Store because there was a casualty event or some other redevelopment activity that was going on. And so we will keep those until those -- out of Same Store, until those are fully stabilized for a 12-month period to keep our results as clean as possible. So that's just our normal course on occasion where we have an asset [ph] too, that for various reasons we need to pull up because of some kind of casualty event or because we've moved into a redevelopment phase. David Bragg - Zelman & Associates, Research Division: Right. So then they did a 4% there, that wasn't outside of your expectations?

No, that was about where we expected it to be. We, of course, would like to do a little bit better on those. And we think we have the opportunity to do a little bit better, but at the same time, we've expected all along for the assets in that category to underperform because of units being down on a year-over-year basis.

[Operator Instructions] And our next question comes from Derek Bower at UBS.

It's Ross Nussbaum here with Derek again. On the 6% renewal rent growth that I think you said you were on track for October, where did that come in relative to what your original ask was? And maybe stated a little differently, was the gap between what you achieved and what you're asking any wider than what it had been earlier in the year?

Ross, Keith Kimmel. I'll take that. The ask that went out was on average 9%. And so it was basically in line with what we've -- actually, I take that back. It was a little bit more of a negotiation from what we've seen in the past coming in at the 6% but still quite strong.

One of the things that I'm trying to get my arms around is part of the issue with the October numbers that lower-end consumers and households in the United States just simply aren't seeing their average-median incomes going up. So as rents have gone up, their ability to stomach these rent increases is just frankly becoming more limited than higher-income consumers who can tolerate it a little better at this point in the cycle. Do you think there's any of that going on here?

Ross, I think so. I think that's insightful. I think -- this is Terry. I think that there's going to be more pressure at lower price points than at higher price points because of income constraints.

Effectively, the rent or buying necessity is suffering a bit more perhaps than the renter by choice.

I think that's right. I think that's what the data shows over the last 2 or 3 years. It's one reason why we've accelerated the sale of lower rent, lower-growth properties and reinvesting at higher price points.

Our last question comes from Swaroop Yalla at Morgan Stanley.

Terry, one quick question. You mentioned that the quality of traffic is higher now, which lessens the importance of the quantity of traffic. So to put October traffic in context, what was the year-on-year chain number earlier this year, say, if you're down 20% in October, what was that percentage in June or July?

I don't know if we have that number right here. Just if you give me a second, Swaroop, we'll look it up or give it to you offline. But broadly, we have been spending a lot of time and money and effort, ably led by Keith Dodds to upgrade and improve our Web marketing and to do more of that online and less of it on-site. So I think my own intuition is that some of the decline in site visits reflects that. But I think you're exactly right that if we track it through, we ought to look at it. So stay tuned for the answer.

Swaroop, this is Keith Kimmel. In June, we saw it was up 4% and in July, down 1%, and that's kind of when we saw the dip.

So is that when the Internet things were rolled out or what was that -- I mean, what was the timing of the [indiscernible]?

The Internet, the Web upgrades are continuing, so there's not a precise moment as to the nature of Internet.

We now have a question from Haendel St. Juste at KBW. Haendel Emmanuel St. Juste - Keefe, Bruyette, & Woods, Inc., Research Division: Just one here, I wanted to talk about Lincoln Place. You guys put out some broad numbers a few weeks back. Can you give us a sense of a, funding of that? I'm assuming a portion of that is going to come from your continued dispositions, but also a sense of yield expectations and timing?

Haendel, it's Terry and I'm here with Miles Cortez, who spent the last several years marshaling that towards a successful conclusion, as well as Dan who's going to lead the redevelopment, so happy for either of them to chime in. But broadly, the question on funding is that it will be funded primarily from property debt at this point, that we have the land, if you will, as our equity and so it will be a cash-neutral or even cash-positive event when we complete the financing. And the yields are ones that we will find accretive, but we will not -- let's deal with that in a specific way when we have a start, and we'll provide that based on current rents and current costs and expected returns. Haendel Emmanuel St. Juste - Keefe, Bruyette, & Woods, Inc., Research Division: In the past, you've talked about 7.5% to 9.5% yields on redevs. I know you've put a lot of money into this project. But based on incremental capital here, is it fair to put the ballpark yield in -- put the yield in that ballpark?

I'd just as soon wait until we're ready to have a start. I think your insights are good that converting a nonearning asset to an earning asset will be a positive event. But I don't want to quantify that until we're ready to go.

Ladies and gentlemen, there are no further questions in the queue at this time. I would like to turn the call over to Mr. Terry Considine for closing remarks.

Well, I'd like to close really where we began, which is although the economy is always of interest and business has its challenges, the fact is we have higher rents, wider margins, an improved portfolio, stronger balance sheet, lower offsite costs and embedded growth prospects going forward. So we are upbeat at Aimco, and we thank you for your interest. Be well.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.